India's strong economic performance in recent years, the International Monetary Fund (IMF) has said India confront the current global economic and financial crisis from a position of strength. India's strong economic performance in recent years reflected sound macroeconomic policies and further progress with structural reforms, the IMF executive directors said in their assessment of their annual Article IV Consultation with New Delhi. Note that there is contamination of the global crisis, the Indian authorities praised the rapid response and comprehensive policy, but stressed that the downside risks and encouraged to pursue a flexible, pragmatic and proactive policy.
 According to a summary of the IMF report released Tuesday directors agree that one of the main short-term policy objective should be to support the liquidity and credit flows. They thought that monetary and structural policies will continue to have most of the burden of adjustment, given the high public debt and GDP. Directors welcomed the central bank for monetary policy actions and encouraging bank lending. A number of drivers making a further easing of monetary policy in the light of the expected decline in inflationary pressures and the need to maintain trust and bank loans.
IMF directors broad support from the authorities gradual and cautious approach to capital account liberalization. They encouraged further progress, taking into account that the liberalization would help the external financial constraints. Directors welcomed the authorities to the liberalization of trade. Directors recognized that the substantial fiscal stimulus in 2008-09 should help to support economic growth. But they stressed that, given the high percentage of government debt to GDP, a significant further expansion of the deficit may raise concerns about fiscal sustainability. They encouraged the authorities for the use of limited fiscal space for high quality, infrastructure and poverty-related expenditures, and bank recapitalization if needed.
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